Indonesia - Support for Poor and Disadvantaged Areas (SPADA) Project : restructuring

53091 THE REPUBLIC OF INDONESIA THE SUPPORT FOR POOR AND DISADVANTAGED AREAS PROJECT PROJECT DATA SHEET Date: January 20,2010 Task Team Leader: John Victor Bottini Country: Indonesia Sector ManagerlDirector: Sonia Hammam Project Name: Support for Poor and Country Director: Joachim von Amsberg Disadvantaged Areas (SPADA) Project Environmental category: B-partial assessment Project ID: P078070 Borrower: REPUBLIC OF INDONESIA Responsible agency: STATE MINISTRY FOR NATIONAL DEVELOPMENT PLANNING (BAPPENAS) Address: Gedung Madiun, 4th floor, Jl. Taman Surapati No.2, Jakarta 10310, Indonesia Contact Person: Dr. Max H. Pohan, Deputy Minister PPN for Regional Development and Local Autonomy, BAPPENAS Tel: (62 21) 392 3462 Fax: (6221) 319 3473 Revised actual disbursements (Bank FY/US$m) *Indicate estimated future disbursements FY 2006 2007 2008 2009 2010* 2011 * 2012* Annual .30 2.00 11.20 57.48 23.00 23.00 1.72 Cumulative .30 2.30 13.50 70.98 94.80 102.28 104.00 Current closing date: December 31,2011 Revised closing date [if applicable]: Indicate if the restructuring is: Board approved X RVP approved - Does the restructured project require any exceptions to Bank policies? - Yes l N o Have these been approved by Bank management? - Yes - No Is approval for any policy exception sought from the Board? - Yes ~No Revised project development objective/outcomes [If applicable] PD~: To strengthen governance, promote growth, and improve service delivery in at least 32 of the poorest districts of Indonesia. Modifications to outcome indicators are presented in Annex B: Revised Results Framework Does the restructured project trigger any new safeguard policies? No Revised Financing Plan (US$m.) Source Local Foreign Total Borrower 30.65 0.00 30.65 IBRD 0.00 69.00 69.00 IDA 0.00 35.00 35.00 Total 30.65 104.00 134.65 I. INTRODUCTION 1. This Project Paper seeks the approval of the Board of Directors to introduce the following changes in the Republic of Indonesia's Support for Poor and Disadvantaged Areas Project (SPADA National), Loan/Credit No. 7776-IND (formerly Loan No. 4788-IND)/4076- IND, and any accompanying amendments to the Project's legal documents. (The loan was originally a variable spread loan with Loan No. 4788-IND. It was converted to a fixed spread loan on July 6, 2009 and the number was changed to Loan No. 7776-IND). The proposed First Order Restructuring is three-fold: first, it will modify the Project Development Objective (PDO) to reduce the number of targeted districts; second, it will revise the Results Framework to refine outcome indicators, intermediate outcome indicators, and targets for the Project; and third, it will make minor adjustments to planned activities, resulting in revisions to the procurement plan and a reallocation of Project funds. II. BACKROUND 2. Project Information. The SPADA Program consists of two separately funded but related projects that are among the core PNPM programs. SPADA National is funded by a World Bank USD 69 million loan and a USD 35 million credit and has been active in eight provinces l throughout Indonesia. This Project was approved in August 2005, declared effective in December 2005 and is scheduled to run until December 2011. The second part of the SP ADA Program, SPADA Aceh Nias, grew out of the post-tsunami assistance effort and focuses on 19 districts in just Nanggroe Aceh Darussalam (Aceh) Province and on Nias Island of North Sumatra Province. It is funded by a USD 22.5 million grant (TF57955-IND) approved by the Multi-Donor Fund for Aceh and Nias (MDF) in December 2006, declared effective in May 2007, and scheduled to close in June 2010. For both SPADA projects, the Ministry for Development of Disadvantaged Areas (KPDT) serves as the Government's implementing agency, and BAPPENAS is the executing agency. 3. Prior to the 2004 tsunami, SPADA National's coverage included 11 districts and one municipality in Aceh province within its geographic scope. In order to more effectively coordinate tsunami and post-conflict relief efforts, SPADA's work in Aceh became part of the MDF-funded reconstruction and development program for Aceh and Nias, effectively reducing the number districts under SPADA National's coverage. 4. This Project Paper only addresses issues regarding the SPADA National Project, as there is no identified need to restructure the SPADA Aceh Nias Project at this time. 5. Project Development Objective (PDO). As stated in the Project Appraisal Document (PAD), SPADA National's current overall objectives are to strengthen governance, I According to its PAD, SPADA National's eight initial target provinces were: Maluku, North Maluku, Central Sulawesi, Nusa Tenggara Barat, West Kalimantan, Central Kalimantan, Aceh, and Nusa Tenggara Timor (NTT). Following a February 2005 decree from the GO!, SPADA National's eight target provinces were modified slightly: Nusa Tenggara Barat and Aceh were dropped and Lampung and Bengkulu were added. 1 promote growth, and improve service delivery in 40 of the poorest districts of Indonesia. The Project will achieve these objectives through three types of activities: (i) Strengthening local participation in development planning; (ii) Promoting private investment and job creation; and (iii) Increasing utilization of effective education, health, and dispute resolution services. 6. Project Design and Scope. To achieve its development objective, the Project has four main components2 : 1. Block Grants at the Sub-district- and District-Level (USD 80.3 million) - for sub- projects in infrastructure, health, education, and private sector development. H. Planning Grants (USD 13.5 million) HI. Implementation Support / Technical Assistance (TA) (USD 38.7 million) IV. Monitoring, Evaluation and Studies (USD 1.8 million) 7. Implementation Performance Ratings. SPADA National experienced a very slow start-up in 2006 and 2007, primarily due to late budget releases and delayed central Ministry level procurements of key TA and consultant packages. As indicated in Table 1 below, Implementation Performance Ratings (IPR) fluctuated significantly among all categories between January 2007 and November 2009. Table 1. Implementation Performance Ratings (from ISRs) FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Development Objective S S MU MS MS Overall Implementation Progress S MU MU MS MS Financial Management S S MS MS MU Project Management S MU MU MS MS Counterpart Funding S S S S MU Procurement S MU MU MS MS Monitoring and Evaluation S S MU MU MS 8. The Project made notable progress from 2008 onwards with improvements in project management and delivery of TA, implementation of project MIS application, increased local government involvement, and improved implementation in the field. This progress is marked by: 1. The recruitment, training, and mobilization of all previously vacant consultant and facilitator positions. 2Any discrepancies between financial figures reported in the Project Paper and those which are reported in the Project Appraisal Document (PAD) are a result of currency exchange fluctuations related to the IDA credit. 2  11. Increased support from local government offices, technical departments, and legislature which have contributed necessary supplemental funding to the Project from their local budgets. These entities are now actively participating in the coordination, oversight, and implementation of SPADA National sub-projects and some have formally adopted SPADA methods for their annual planning process. 111. Nearly 100 percent disbursement of planning and block grants in all locations for the 2007-2008 funding cycles; and notable progress is being made regarding disbursements for the 2009 funding cycle. This progress is significant compared to the Project's first two years of implementation when no block grant funding was disbursed. These grants are core to strengthening capacity of local government, improving governance and empowering communities. IV. The Project Monitoring Unit (PMU) is staffed with a team of monitoring experts and has a monitoring and evaluation system supported by standard field reports, which were implemented in late 2008. The MIS software application is working properly and has been rolled out to all project locations. v. Additional training was conducted for all staff involved III funds management. Recent supervision in one province revealed good financial management practices are being employed from the village- to the district-level, although results were mixed in other locations. VI. Streamlining of the procurement plan and additional training for all KPDT procurement staff/committee members has helped reduce the administrative backlog and prioritized outstanding procurements. The TA contract for Financial Management and Procurement specialists was awarded in September 2009. V11. KPDT management, staffing, and activity coordination improved with a new Deputy Minister in 2007, and recent appointment of a new Minister, in the Implementing Agency. The new administration has restructured technical and financial management teams, hired additional technical specialists (including procurement specialists), and is facilitating regular meetings between KPDT and the World Bank. 9. Two IPRs were downgraded in the most recent ISR. Financial Management is now rated Moderately Unsatisfactory (MU) because recent supervision found lack of adequate supporting documentation for block grants in a small number of locations (especially remote sub-districts) and a few cases of alleged misuse of funds that were not dealt with in a timely manner. The cases now are being resolved according to the built-in SPADA mechanism, where communities help to recover funds and sanction offenders. Financial management specialists are being mobilized to provide training and more intensive oversight during 2010 disbursements. Counterpart Funding also is downgraded from Satisfactory (S) to MU. Insufficient information 3 was available to determine the full extent of government or community contributions, although local governments are generally meeting or exceeding the minimum contributions required by the Project. 10. Project Performance to Date. Calendar years 2008 and 2009 represented a major turning point for SPADA National, as the Project had not disbursed any block grant funds during the previous two years of implementation. Significant progress was made not only in disbursements, but also in terms of meeting intermediate outcome indicators (as presented in the proposed revised results framework). Indications of this progress include the following: 11. Local Governance Strengthening. SPADA's participatory planning process and disbursement of block grants (with associated TA for local government coordination of the program) is core to strengthening the capacity of local governments, improving governance, and empowering communities. During calendar years 2008 and 2009, nearly 100 percent (compared to annual target of 70 percent) of the 2007-2008 planning and block grants were disbursed at both the sub-district and district levels. Additionally, good progress is being made in the planning for 2009 cycle block grants. Due to chronic delays in issuing the state budget (DIPA), annual funding for SPADA and other PNPM projects commonly carry-over into the next calendar year. It is expected that some 2009 funds will be carried-over for sub-project implementation in calendar year 2010. Table 2. Disbursement Status of Planning and Block Grants as of December 16,2009 3 2007 Cycle 2008 Cycle 2009 Cycle District 8,891,697 (96%) 7,768,842 (98%) 2,388,879 (28%) Sub-District 11,560,000 (97%) 10,202,700 (100%) 3,504,685 (32%) 12. Promoting Growth. After long procurement delays, private sector development consultants are now in place at the Central level and in all Project districts. Assessments of obstacles inhibiting effective business operations and hindering growth have been completed in 28 districts (compared to end-of-project target of 20 districts). Business-Government forums designed to prioritize needs for private sector development are operating in 17 districts and private sector committees (PSC) for advocating regulatory changes have been established in six 3Source of data is KPDT Project Implementation Unit - SP2D. Conversion from IDR at rate of 10,000 IDR = I USD. Only 40 percent of 2009 cycle funds were allocated in the 2009 State budget (DIPA). Remainder will be carried over for disbursement in 20 I o. 4 districts. The institutional framework is now set, and consultants are assisting the business forums and PSCs to make and track recommendations to mayors and local legislature for regulatory improvements designed to encourage businesses to invest in their growth and create jobs. 13. Growth is also promoted through sub-projects designed to improve basic infrastructure, such as roads and bridges, which are opening physical access to markets in SPADA's remote areas, significantly reducing time and costs for farmers to transport their goods to markets, and providing thousands of temporary jobs. Irrigation sub-projects are helping farmers increase crop yields and incomes, and youth are receiving practical vocational skills training through sub-project implementation which will better prepare them in securing longer- term jobs. 14. Improving Service Delivery. More than half of all district and sub-district (district at 63 percent; sub-district at 47 percent) block grants disbursed to date were used to fund health and education sub-projects, far exceeding the Project's combined target of at least 30 percent of district-level block grant funding used for sub-projects in the health and education sectors (no target is set for sub-district level block grants). The majority of district-level health sub-projects focus on increasing access and improving service quality through training of health professionals and volunteers and rehabilitation of health clinics (65 units 4 rehabilitated compared to current end-of-project target of 50). Training of teachers and school management, provision of educational tools and school rehabilitation (302 units rehabilitated to date compared to current end-of-project target of 300) through SPADA district-level sub-projects are improving access to and quality of primary school education. To date, nearly 12,000 teachers, principals and education committee members (compared to current end-of-project target of 500) have received training through the Project. 15. At the sub-district level, SPADA is helping to improve quality of health services through sub-projects for nutrition, training of health care providers, and provision of equipment and furniture for clinics. Access to and quality of primary school education is being increased through sub-projects for training of teachers, equipment and furniture for classrooms, and scholarships for books and school uniforms. A special focus on youth (five percent in all sub- districts) is helping to organize and train unemployed young men through sports activities and vocational training to help reduce potential for involvement in activities related to militancy, organized crime and gangs. 4Data for SUb-projects is as of December 16,2009, and based on data from all locations for 2007-2008, all sub- districts for 2009, and from 75 percent of SPADA districts for 2009 cycle. District data from Maluku and Lampung provinces had not yet been formalized by all district governments. 5  Chart 1: Block Grant Disbursements by Sector District Block Grants Sub-District Block Grants Infrastructure Education 31% 22% 16. Dispute Resolution. Communities in eight SPADA sub-districts in post-conflict Maluku Province will ha:re access to better dispute resolution services through a new Mediation and Community Legal Empowerment activity funded through SPADA. Facilitators have been trained and mobilized; and paralegals have been selected and will be trained to begin handling cases in 2010. 17. Performance by Province. All provinces exceeded the Project target of 70 percent disbursement for the 2007-2008 block grant funding cycles, and six of eight provinces disbursed 96-100 percent. While delayed by turnover in local government, NTT and Central Kalimantan still exceeded the Project's target of 70 percent for each year, with 90 and 74 percent, respectively. This performance is a major improvement since the Mid-Term Review was conducted in February 2009 when less than half of the 2007 funds were disbursed and less than 15 percent of 2008 cycle funds were disbursed. Details of disbursement performance by province are included in Annex A. 18. Disbursements to the Designated Account. While lagging behind original disbursement plan projections by approximately $20 million for fiscal year (FY) 2009 (i.e., USD 71 million compared to USD 95 million planned), SPADA National is now disbursing at a level that will allow it to catch up to the original disbursement plan in FY 2011. Total disbursements are now at 71 percent with two years remaining in the Project. 19. Block and planning grant disbursements are now progressmg well. Goods and consulting services for implementation and for monitoring and evaluation are disbursing at a slower pace and, with proposed small changes in planned activities, will allow for reallocation of some funds to block and planning grants. 6  Chart 2. Financial Disbursements S by Component as of January 5, 2010 (USD $millions) IIIIi Allocated usa 'Disbursed U5D 70.00 60.00 50.00 40.00 30.00 20.00 -- 10.00 0.00 BLOCK GRANTS PLANNING GOOOS& CONSLT GOODS& CONSLT GRANTS IMPl lvl&.E III. REASONS FOR PROJECT RESTRUCTURING 20. Reduction in Number of Target Districts. SPADA National was approved in August 2005 and was designed to provide support to 40 of the poorest districts throughout eight provinces in Indonesia - including Aceh province. Districts selected for SPADA support are among the 199 officially recognized by GOI as "disadvantaged". Once SPADA Aceh Nias became effective in May 2007, it assumed responsibility for supporting Aceh districts originally targeted by SPADA National, effectively reducing SPADA National districts by 12. A February 2005 decree from the GOI resulted in SPADA National later dropping Nusa Tenggara Barat province and its three districts from the Project's coverage and adding six districts in Lampung and Bengkulu provinces. Further adjustments were made to the selected bringing SPADA National's total to at least 32 target districts. These adjustments did not fully compensate for the 12 districts dropped when Aceh shifted to SPADA Aceh Nias' coverage. The PDO should therefore be formally modified to state that SPADA National is targeting at least 32, rather than 40 of the poorest districts in Indonesia. 21. Clarification of Outcome Indicators and Intermediate Outcome Indicators. SPADA National's outcome and intermediate outcome indicators were developed using the old World Bank format for its logical framework. This format required many more indicators than current requirements. A subset of the 36 PAD indicators was included in the Project's Legal Agreement. Some of the PAD indicators were poorly stated or difficult to measure. During the Mid-Term Review, it was recommended that the indicators be reviewed and any needed changes be included in an amendment to the Legal Agreement. 5 Source: Client Connection, January 5, 2010. 7 22. As a result of this process, the results framework was modified to current requirements and indicators clarified to make them more appropriate determinants of the technical components' progress. The proposed Revised Results Framework included in Annex B is fully consistent with the PAD, while reducing the number of indicators from 36 to 16. Once these changes are made, SPADA National will be much better positioned to assess the impact of Project activities. 23. Changes in Planned Activities. As SPADA National has progressed, the World Bank and KPDT have identified two planned monitoring and evaluation (M&E) activities which are no longer essential in the final years of implementation: "Province-Based Monitoring" and "M&E District Capacity Building". The "Province-Based Monitoring" activity was designed to fund a cadre of civil society groups (NGOs) to monitor and report on sub-project implementation. This activity has been deemed no longer suitable because of the lack of interested and/or qualified NGOs available to participate within SPADA National's target provinces. Local and national journalists, however, do continue to report on SPADA National's activities and their involvement is encouraged through the Project. 24. The second activity, "M&E District Capacity Building," was not originally envisioned in SPADA National's design and is not included in the PAD. The World Bank agreed to the GOl's request to add the activity in an effort to build the monitoring capacity of district government representatives and local stakeholders. This activity now has been deemed unnecessary and ineffective based on experience implementing similar M&E capacity building activities through the Kecamatan Development Program (KDP). 25. The Project already employs appropriate measures for monitoring activities, which are built into the community participatory process at all levels. Regular field supervision missions, monthly progress reporting, complaints resolution procedures, and financial reviews and audits are all monitoring activities which are already part of SPADA National's management structure. Additionally, district- and province-level Bappedas (local planning agencies) head project coordination teams that meet to review project status and implementation issues. BAPPENAS' Project Monitoring Unit is staffed with a team of monitoring experts and has a monitoring and evaluation system supported by a standard project reporting system in the field, which was implemented in late 2008. By dropping the aforementioned M&E packages and related TA, SPADA National can adjust its procurement plan and reallocate additional funds to the Project's block grant and planning grant components. 26. Financial Management. The Project has experienced some financial management issues at the sub-district level which may contribute to increased fiduciary risk. The major issues of concern relate to accounting, documentation practices, and internal control measures. These deficiencies have resulted from the lack of financial management consultants which were envisioned in the original design (delayed by procurement issues) and weak financial management capacity of funds management units at the sub-district level. Financial management practices are being improved through the provision of additional training to staff working in 8 funds management units, the mobilization of financial management specialists to increase oversight of activities, and by increasing the frequency of consultants' financial management supervision missions to the participating sub-districts. III. PROPOSED CHANGES 27. Modification to the PDO. Since the advent of SPADA Aceh Nias, SPADA National is no longer responsible for covering districts within Aceh Province. Consequently, it is proposed to modify SPADA National's PDO to reflect a reduction of target districts from 40 to at least 32, to read as follows: "To strengthen governance, promote growth, and improve service delivery in at least 32 of the poorest districts oflndonesia." 28. Revised Results Framework with Refined Indicators and Targets. With the proposed restructuring, a revised Results Framework will be adopted establishing new outcome indicators, intermediate outcome indicators, and associated targets for the Project. Accordingly, the PAD and Project's Legal Agreements will be amended to reflect these proposed changes. A proposed revised Results Framework already endorsed by the Government is presented in the approved World Bank format and included as Annex B. The revised Results Framework will reduce the number of outcome indicators from seven to six and reduce the number of intermediate outcome indicators from 29 to 15. The revisions are fully consistent with the PAD. 29. Changes in Planned Activities. SPADA National is in the process of dropping two of its planned M&E activities which were deemed non-essential or unsuitable during the final years of implementation: "Province-Based Monitoring" and "M&E District Capacity Building". The Project's participatory planning process is designed to be open and transparent, subject to monitoring by the communities, the government and other local stakeholders. The World Bank also routinely monitors the Project in its supervisory role. In support of monitoring and evaluation, the Government has developed an MIS and monitoring system. Therefore, M&E will not be compromised by this change and funds can be reallocated to other activities - namely, the Project's block grants and planning grants components. A revision to the Legal Agreement is needed to remove the requirement to hire one NGO in each province to monitor Project activities. 30. Initially, a total of 47 procurements were planned for the Project, which included many T A and M&E packages of a relatively small value intended to be awarded to consultants/NGOs. To date, a total of only 26 of these packages have been awarded, and 21 planned packages remain to be procured. In an effort to reduce complexity of the procurement arrangements, the World Bank agreed to GOl's request to drop those planned packages which have activities that could be easily folded into existing contracts by amending their scope, along with dropping the two aforementioned non-essential M&E activities. 31. The following table presents a summary of revisions to SPAD A National's Procurement Plan which results from making the proposed changes to the Project's planned activities. On 9 June 19,2009, the World Bank issued a No Objection Letter (NOL) for the revised Procurement Plan prepared by the GOL Table 3: Changes to SPADA National's Activities and Procurement Plan Proposed Action for Remaining Procurement # of Packages Procurement Package Packages 3 packages will remain unchanged, and 1. .Financial Management Specialists procurement method will proceed as planned 3 2. Contlict Monitoring without revision to their scope. 3. Independent Media Monitoring 1. Studies: Health, Education, Activities of 6 packages may be merged into similar Infrastructure (new), Private Sector, 6 scopes in existing SPADA contracts General Case Studies (5 packages) 2. Woman-Headed Households 2 packages will be dropped, as their planned 1. Impact Study activities are covered by existing non-SPADA 2 2. Law & Dispute Resolution (Research) contracts. 9 packages will be dropped because evidence from KDP has indicated that their associated 1. Province-based Monitoring (8 packages) 9 interventions are ineffective and not required at this 2. .M&E District Capacity Building point in the Project's implementation. To be discussed whether or not to continue 1 1. District Profile Baseline Survey 32. Reallocation of Funds. Dropping some SPADA National activities and revising the Procurement Plan accordingly will avail approximately USD 2.9 million in funds which can be reallocated from the Project's TA and M&E components to the block grants and planning grants components. This proposed reallocation, as depicted in Table 4 will enable the Project to fully utilize the funds for investment sub-projects in infrastructure, health, education, and private sector development. Table 4: Proposed Reallocation of Funds among SPADA's Technical Components Original Amount after Reallocation Allocation of Proposed Amount as % of Category/Component Loan/Credit Reallocation Changed Total Funds (US$ million) (US$ million) Loan/Credit (US$ million) Block Grants 61.0 61.4 +0.4 0.4% Planning Grants 13.5 16.0 +2.5 2.4% Implementation Support / 1.7% 28.3 26.5 -1.8 Technical Assistance (T A) Monitoring, Evaluation 1.0% 1.8 .7 -1.1 and Studies Fee .3 .3 0 0.0% TOTAL: 104.9 104.9 2.9 2.8% 10 33. Financial Management. To improve financial management practices at all levels so fiduciary risk is minimized, SPADA National is instating the following measures: 1. Additional financial management training has been provided for all sub-district- and district-level funds management units in all provinces, districts and sub-districts. ii. Qualified financial management specialists will be placed in the field to train district and sub-district consultants/facilitators and monitor financial practices. 111. Field consultants (District Management Consultants and Community Facilitators) will increase supervision to visit at least half of the sub-districts on a monthly basis. IV. The GOl implementing agency for SPADA, KPDT, will establish regular (biweekly or monthly) bank reconciliation procedures for all accounts. 34. Administrative Changes to Legal Agreement. To reflect these proposed changes, and clarify language within SPADA National's Legal Agreement, the document will be amended to reflect a few administrative changes, including replacement of Schedule 3 - Procurement with current model form of agreement that incorporates updated Procurement Guidelines. A full listing of proposed amendments to SPADA National's Legal Agreement is included as Annex C. IV. ANALYSIS 35. The most notable changes in the proposed restructuring are the modification of the Project's DO and the revision of the Project's Results Framework. The proposed change will officially reduce the number of targeted districts, and reduce the overall number of outcome indicators, intermediate outcome indicators and associated targets. The project design, institutional arrangements, duration, and level of funding will remain unchanged. The types and size of sub-projects, and the process of how they are selected, will also remain unchanged. Together with resolution of issues, such as procurement, that were causing bottlenecks in Project implementation, this increased focus on results is expected to significantly improve Project implementation. 36. World Bank Policies. SPADA National is classified as a Category B (partial assessment) Project. The proposed restructuring will not change the social nor economic aspects of the Project, nor will it trigger new safeguard policies nor raise the environmental category of the Project. The proposed restructuring does not involve any exceptions to the World Bank policies. V. EXPECTED OUTCOMES 37. The most significant expected outcome of this proposed restructuring will result from modifications to SPADA National's DO and its Results Framework. The restructuring will effectively reduce the number of the Project's targeted districts from 40 to at least 32. However, 11 those districts which are no longer receiving support from SPADA National are now receiving support from SPADA Aceh Nias. The combined implementation of these two Projects has ensured that the total number of districts reached by the SPADA Program in its entirety has not diminished. 38. The proposed restructuring will also revise the Project's Results Framework, modifying language and targets associated with SPADA National's performance indicators. The changes will reduce the number of outcome indicators from seven to six and reduce the number of intermediate outcome indicators from 29 to 15. Annex B: Revised Results Framework provides details on the changes that are proposed for both levels of indicators. 39. Changes to planned Project activities (i.e. the dropping of two M&E activities) will lead to a reallocation of Project funds to support additional community investments in sub- projects through block grants. VI. BENEFITS AND RISKS 40. Benefits. One of the main benefits of the proposed restructuring is to have better quality monitoring of the Project's progress. In modifying the DO and revising the Results Framework, language will be more accurate and simplified so sub-project achievements can be more appropriately measured, and their contributions towards achieving the DO and be more clearly determined. These changes, along with the associated amendments to the Project documents will also address any indicator discrepancies which currently exist between the Project's PAD and Legal Agreement. 41. Another benefit for the Project derives from the cancellation of unnecessary and/or unsuitable planned activities. Making these minor adjustments to the Project's design, and associated revisions to the Project's Procurement Plan, will avail approximately USD 2.9 million in funds which can be reallocated to the block grants and planning grants components. Despite the proposed cancelling of some procurement packages, all activities essential for project implementation will continue to be covered by amending other contracts. 42. Risks. A number of financial management practices have been indentified which need to be improved to reduce fiduciary risk - particularly those practices related to accounting, documentation, and internal controls in the field. Remedial actions in the form of additional training have already been carried-out and the frequency of supervisory missions is being increased to address these concerns. Recent supervision in one province indicated the training was effective, with demonstration of good accounting and recordkeeping from village to district level. Although these issues do have an impact on SPADA's overall implementation effectiveness, they are not risks which are directly associated with the proposed restructuring of the Project. 12  ANNEXA DISBURSEMENT STATUS FOR DISTRICT AND SUB-DISTRICT BLOCK GRANTS BY PROVINCE AS OF DECEMBER 16, 2009 District 27000 (100%) 600.000 (100%) 49.400 (100%) 510.519 (100%) 21.450 (40%) 222.150 (40%) BENGKUlU Sub